The Oscars ceremony appeared to have been saved last night as Hollywood's striking film and TV writers announced a 'tentative' deal with major studios that could end their paralysing dispute.

The three-month-old strike has delayed numerous movies and halted production of some hit TV series - including Desperate Housewives, Lost and 24. The Golden Globes ceremony was cancelled and this month's Academy Awards, which British acting nominees Daniel Day-Lewis and Julie Christie are hoping to attend, was threatened.

But in an email to its 10,500 members, the Writers Guild of America said it had now reached a compromise with the studios which would be put to its members. They could still reject it but that is thought unlikely. The dispute broke out over possible future revenues from internet distribution of TV shows and films.

The guild's email also hailed the tactic of taking writers out on strike. 'While this agreement is neither perfect nor perhaps all that we deserve for the countless hours of hard work and sacrifice, our strike has been a success,' it read.

In New York and Los Angeles the first images of striking - and often wealthy - writers was first greeted by amused disinterest by many Americans. That was reinforced by coverage of Hollywood stars and TV personalities appearing on the picket lines, bringing doughnuts or waving banners in solidarity with the striking writers.

But the financial cost of the strike soon became apparent. The Los Angeles Economic Development Corp has estimated it cost the region about $650m in lost wages as studio work ground to a halt, staff were laid off and even restaurants and cafes emptied. The total ripple effect of the strike is thought to have been at least $1bn.